I suspect that the market is pricing in further growth as PME consolidates its position as the standout software in this space.
Remember they are selling software as a service for the most part and the margins are very attractive. They have a good pipeline of prospects and clear market leadership.
Would not be surprised to see an offer they can't refuse come up at some point - the founders will want to sell down at some point I would think - Sam H has to be at least in his late 60s by now.
Interesting article in today's Fin reviewPro Medicus soars as it scores record-breaking deal
Yolanda RedrupReporterJan 14, 2021 – 1.57pmMedical imaging technology company Pro Medicus has secured its largest ever contract, locking in a seven-year deal with Salt Lake City-based US healthcare group Intermountain worth $40 million.
Pro Medicus CEO Sam Hupert says it's a relief to get a deal like Intermountain signed after years of work. Arsineh Houspian
It is the fifth deal the $3.75 billion medtech company has closed in the last six months, all of which have been with large, prestigious US hospitals.
On the back of the announcement, Pro Medicus shares surged more than 13 per cent by lunchtime, trading at its highest price since August 2019 at $36.02 at 1:20pm.
The company's flagship Visage software letsradiologists view reports and large image files generated by X-rays and other medical scans on-the-go from their mobile devices, enabling them to make diagnostic decisions remotely.
The new deal with Intermountain will see Pro Medicus' public cloud-based version of its Visage 7 Viewer and Open Archive software rolled out across Intermountain's network of 24 hospitals and 200-plus clinics. It will be fully deployed on the Google Cloud Platform.
Speaking toThe Australian Financial Review,Pro Medicus CEO Sam Hupert said the deal had been multiple years in the making.
"These big complex groups take four-plus years [to close]. Intermountain has been speaking to us for many many years," Dr Hupert said.
"They'd had their current system for more than 15 years... They don't make these decisions lightly.
"We were able to continue the negotiations remotely through COVID and were very pleased with that."
Since last Jun Pro Medicus has secured major contracts with Northwestern Memorial Healthcare, NYU Langone Health, US outpatient radiology provider Zwanger Pesiri and US health system MedStar.
Many of Pro Medicus' deals to date have been with academic hospitals, but neither Intermountain or MedStar are academic, showing the company is successfully pushing further into the US healthcare system.
While Dr Hupert said it had been a big few months for the business, he said the pipeline of future deals was still strong.
"What's been very encouraging in the last six to eight months is despite COVID-19, we've had some inbound new entrants to the pipeline across multiple segments and sizes," he said.
"We've been very successful in converting these five deals, but that does not mean the pipeline is drained."
In the year to June 30, Pro Medicus recorded 23.9 per cent jump in revenue from underlying operations to $56.8 million. At the same time net profit after tax surged 20.7 per cent to $23.1 million.
At the time of the results the company stated it expected the majority of growth would occur in the second half of the 2021 financial year.
RBC Capital Markets lead technology analyst Garry Sherriff was bullish about Intermountain's decision to sign onto Pro Medicus' public cloud solution.
"We are positive on the benefits of Pro Medicus' cloud-native product suite, as cloud deployments are in our view more scalable and able to be implemented faster for customers, driving greater growth over the medium term," he said.
"It is also a key competitive advantage of PME’s solution versus competitors and represents a shift in healthcare spending from on-premise to cloud solutions."
In 2021, Dr Hupert said his three big priorities would be to increase its footprint in the US healthcare system, implement the deals it's recently closed andcontinue to invest in artificial intelligence and its application in research.
"The aim is to become the major player in the healthcare imaging space and we have a way to go to get there, but if we can keep up this momentum I think we will," he said.
Yolanda Redrupwrites on technology from our Melbourne newsroom.Connect with
Ann: PME signs A$40M - 7 year contract with Intermountain Health, page-11
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